Right now in Canada, electric cars come standard with sticker shock.
From nearly $42,000 for a base-model Nissan Leaf (before rebates), to nearly $213,000 for a base Lucid Air Grand Touring, EVs aren’t cheap.
So, if EVs were more affordable, would more of us make the switch?
Despite a $5,000 national federal rebate and additional rebates of between $4,000 and $8,000 in seven provinces, Canadians surveyed in a KPMG poll this winter said price was among the top reasons keeping them from considering an EV.
“More than a third [35 per cent] said they want to spend less than $30,000 on a new vehicle,” said Damiano Peluso, partner and national automotive industry leader with KPMG Canada. “Slightly more [37 per cent] … said they would be willing to spend between $30,000 to $50,000.”
So, could we ever see cheaper EVs than we have now?
In March, Volkswagen unveiled its ID.2all concept car. It’s a Golf-sized, entry-level EV with up to 450 kilometres in range. The proposed starting price is less than €25,000 (about $37,000).
Although Volkswagen Canada said it’s “keenly interested” in the ID.2all, promised for Europe by 2025, it’s not yet clear whether it will come to Canada – or, if it does, what the price would be here.
“I’d say we’re probably about a year or so out from getting much clarity as to whether or not – and when – it might come to our country,” Thomas Tetzlaff, VW Canada spokesman, said in an e-mail.
While $37,000 might not sound like a bargain, the final price could potentially drop to $32,000 in those provinces without additional rebates. That’s assuming Volkswagen keeps the price under $37,000 to begin with.
But so far, with development costs and high battery prices, a low-priced EV has been elusive.
Three years ago, Tesla chief executive officer Elon Musk promised to bring to market a self-driving EV for less than US$25,000 ($34,000) by now. That car is still just a rumour.
Cheap trick?
This year, Ottawa has said it will finalize regulations for a national zero-emission vehicle (ZEV) mandate that will require at least 20 per cent of new cars, SUVs and pickup trucks for sale in Canada to be full battery-electric vehicles, plug-in hybrid electric vehicles or hydrogen fuel-cell vehicles by 2026.
That will increase to 60 per cent of sales by 2030 and 100 per cent by 2035.
But will cheaper EVs help put an electric car in every driveway?
“Judging by our poll findings, it will take a price in the low $30,000s and a decent range per charge … to really persuade mainstream buyers to switch from gasoline vehicles,” Peluso said.
While cheaper EVs could help expand the market, gas-powered cars aren’t as cheap as they used to be either, said automotive industry analyst Andrew King.
“Vehicle prices as a whole have been increasing rapidly over recent years – the average transaction price for a new vehicle in Canada hit $50,000 in 2022,” said King, who is managing partner with DesRosiers Automotive Consultants Inc., a Richmond Hill. Ont.-based car industry market research company. “As recently as 2017, that number was only $40,000. Most of the change has come from the semiconductor shortage, although some of it is from consumers moving from passenger cars to more expensive SUVs.”
In recent years, companies have stopped selling relatively cheap, fuel-efficient, gas-powered compact cars, including the Honda Fit, Nissan Micra and Fiat 500. Even a Honda Civic now starts at nearly $30,000.
Cheaper EVs may require manufacturers to cut costs, which could mean smaller batteries and less range than the 400 kilometres we’re typically seeing in many EVs now.
It raises the question: Would small, cheaper “city EVs” really be enough to spur widespread adoption?
“I think there will be a market for city EVs,” KPMG’s Peluso said. “Most city dwellers wouldn’t need to worry about range unless they’re travelling outside of the city. But once the infrastructure is built out and more reliable, any concerns about charging anxiety should fade.”
Unfortunately, price isn’t the only thing keeping people out of EVs.
In KPMG’s poll, 33 per cent of respondents said a lack of charging stations, limited EV availability and long wait times were also holding them back.
“There are many other barriers aside from just vehicle price,” DesRosiers’ King said. “For example, Canada’s charging infrastructure is pitiful and nowhere near adequate to deal with the ZEV targets established by the government.”
Jason Tchir